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ECONOMY | 06-05-2024 19:42

Banks accuse MercadoLibre’s fintech arm of ‘abusive conduct’

Argentine banks file legal complaint against MercadoLibre for alleged “abusive conduct” on its digital payments platform, ratcheting up more pressure on the company after new Central Bank regulations imposed key changes on the fintech sector.  

Argentine banks filed a legal complaint Monday against MercadoLibre Inc for alleged “abusive conduct” on its digital payments platform, ratcheting up more pressure on the company after new Central Bank regulations imposed key changes on the fintech sector.  

MODO, a virtual wallet backed by some 30 Argentine banks, accused the e-commerce giant of forcing consumers to fulfill online purchases via its payment platform, Mercado Pago, among other practices, according to MODO’s statement regarding its formal complaint before Argentina’s National Commission for the Defence of Competition.

“MercadoLibre’s abusive conduct, detailed in the complaint, creates negative effects for the market, disproportionately maximising its earnings,” MODO wrote in the statement, adding that it’s confident Argentine authorities will investigate “one or more anti-competitive practices,” forcing an “in-depth analysis of the payments and digital wallet ecosystem.”  

MODO claims that 80 percent of e-commerce retail sales in Argentina are done via Mercado Pago. While MODO lauded the platform’s technology and recognised its dominant performance, it accused the company of distorting the competition.  

A spokesman for Mercado Pago didn’t immediately provide comment Monday. Founded in 1999, the parent company MercadoLibre is now Latin America’s second-most valuable publicly listed company with a market capitalisation of US$84 billion. Across the region, it recorded 49 million monthly active users for its fintech platform. 

MercadoLibre’s share price rose 1.4 percent Monday to US$1,654 after posting earnings last week that surpassed analysts’ expectations. 

MODO’s filing comes after Argentina’s central bank mandated on April 30 that merchants who display QR codes in stores to scan and pay must accept that consumers can make digital purchases from any bank or service provider — a move that would force MercadoLibre’s hand in opening up its payment network.

The Montevideo, Uruguay-based company is still negotiating with banks and other digital payment networks on the terms of opening up its QR payment system to third-party operators, Osvaldo Giménez, president of the MercadoLibre’s fintech unit, said during an earnings call with analysts on May 2. 

“We need to agree on commercial terms with the counterparties, which are likely to be banks and other wallets, and we are in that process,” he added.   

by Kevin Simauchi, Bloomberg

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